'Global MRO Expansion' Could Benefit CM Heavy Industries... Company Up for Sale [fn Market Watch]

[Financial News] CM Heavy Industries, a manufacturer and supplier of ship hull blocks, shipbuilding equipment and plant structures, is up for sale. It owns a 32,219-square-meter site and a 5,669.58-square-meter building in the Goseong Shipbuilding Special Zone in South Gyeongsang Province, giving it a production base capable of manufacturing large structures and transporting them by sea. With the company effectively out of operation since July 2024, its ability to resume operations is considered important.
According to investment banking (IB) industry sources on the 15th, the Changwon District Court and CM Heavy Industries decided to pursue an M&A before approval and selected Ernst & Young Hanyoung as sale adviser. The sale will proceed through a stalking-horse process, with a party holding a right of first refusal. The holder is said to be a company based in South Gyeongsang Province.
Letters of intent (LOIs) will be accepted through the 20th, followed by due diligence, with acquisition proposals due on Dec. 2. At least 50% of the acquisition price is to be paid through a paid-in capital increase. Since the acquisition proceeds will be used to repay rehabilitation debts, only public-interest liabilities and the target company's corporate bonds will remain after the M&A.
CM Heavy Industries can transport goods by sea via its quay. It can manufacture and transport large structures weighing more than 30 tons. It has equipment for making large blocks, including a 300-ton-class gantry crane and 60-ton-class cranes.
Its track record across shipbuilding and offshore plant projects has also been demonstrated. It has experience manufacturing ship engine-room blocks for HD Hyundai Heavy Industries and cranes for Hyundai Samho Heavy Industries.
It has a track record in offshore plant jackets, industrial cranes, and power generation and steelmaking equipment. In 2022, it fabricated and supplied steelwork for the No. 2 indoor coal storage facility at Dangjin Thermal Power Plant for Samwon Heavy Industries. In 2019, it fabricated and supplied desulfurization equipment and electrostatic precipitators for Goseong Hai Thermal Power Plant for SK Construction (now SK ecoplant), including 78 sea shipments of the equipment. In 2021, it also fabricated and supplied nine container cranes for Hyundai Samho Heavy Industries for Phase 2-5 of the West Container Terminal at Busan New Port.
Combining idle yards, factories and cranes with the buyer's order base is seen as a way to secure production capacity more quickly than investing in new facilities. The business appears positioned to benefit from increased orders for maintenance, repair and overhaul (MRO) as the shipbuilding industry recovers.
An IB industry source said, "With key production facilities, the quay and yard still in place, production capacity can be brought online quickly without large-scale facility investment. The entire process—from bringing in materials to assembly and welding and shipping out via the quay—can be carried out at a single site," adding, "The buyer can build up a track record across a range of sectors, including shipbuilding, offshore plants, power generation, steelmaking and industrial machinery. By leveraging its vendor registration with top-tier domestic shipbuilding and heavy-industry companies and its track record in meeting quality requirements, it should be able to enter the market in a short time."

[email protected] Kang Gu-gwi Reporter